Scaling alternative solutions to cut through the darkness and solve a problem bigger than loadshedding

Insights by Sihle Gumede, Partner.

As South Africans get used to life without loadshedding – with the middle classes watching TV and cooking dinner in the warm glow of uninterrupted electricity – it is easy to forget that the continent-wide energy crisis that is crippling economies is not just about availability; even when there is enough electricity, it is simply unaffordable for many businesses, which has a direct impact on their ability to contribute to economic growth and create jobs.

It is in this context that SA-based private equity firm Sanari Capital recently announced an R87.5 million (US$ 5 million) investment in energy solutions company, Energenic Holdings, which is rolling out a range of alternative energy products and solutions across Africa.

Energenic is the fourth portfolio company of the Sanari 3S Growth Fund, which has raised c.R1.5 billion ($80 million), it was announced on December 12.

As Sihle Gumede, partner at Sanari Capital who led the investment, explains: “Solving loadshedding would only scratch the surface of the country’s energy problems. Even in South Africa, if loadshedding were to disappear forever, energy is still unaffordable and becoming more expensive.”

For many South Africans, loadshedding is the defining symbol of the energy crisis. The current reprieve gives the impression of #ProblemSolved, when it is anything but.

The power crisis is behind a lot of hardship across Africa. Even when electricity is plentiful, millions of people and businesses across the continent do not have access.

“There are many parts of the continent without access to any form of national grid. The likelihood of governments solving electricity infrastructure challenges to create functioning national grids across those countries in the short to medium term is very low,” says Gumede.

Those who are connected struggle to afford the ever-increasing cost of power. And the highest price of all will be exacted on future generations, thanks to the damage being done to the environment by old-style power generation.

Sanari’s investment, under the theme ‘There is No Planet B’, will help to power the scaling of Energenic’s business across Africa. With origins in providing generators for the film industry in South Africa, and to cell-phone towers around Africa, Energenic has deep knowledge of the challenges in the energy space in Africa.

“For decades, Energenic has been pioneering energy solutions within the diesel generator space. The spirit of innovation, combined with over 20 years of deep knowledge, expertise and experience, is now driving the focus and investment into the broader alternative energy space,” adds Gumede.

Low and declining electrification rates – in many African countries averaging 30% – are fuelling the demand for alternative power solutions, with a growing emphasis on renewable hybrid solutions that address energy access and reliability, as well as climate change.

Energenic’s range of energy generation products and solutions already provide reliable, cost-effective energy to key growth sectors – including telecommunications, tourism and general commerce – in 32 African countries.

“The demand for hybrid solutions that provide energy security and tailored usage management for businesses is highly relevant in our environment where concerns extend beyond grid availability to include affordability, environmental sustainability and efficiency,” says Gumede.

She adds that Sanari is “committed to being part of the solution in addressing these challenges, deploying its approach of partnering with management teams to build businesses that are Sustainable, Scalable and Saleable (Sanari 3S)”.

The 3S solution is the “secret sauce” that drives the majority-Black-owned, female-run private equity firm’s success in terms of traditional business metrics, high impact and social returns.  With a specialisation in founder-run, owner-managed and family-owned businesses, Sanari focuses on medium-sized and mid-market companies in Africa, working to unlock value and help to scale these companies, which are significant drivers of economic growth and job creation on the continent.